Kampala

The long-running conflict between the board of directors and management of Uganda Development Bank (UDB) and the Inspector General of Government took a nasty turn this week when the bank’s chief executive officer spent two nights in jail.

On Monday, Ms Patricia Ojangole went to the Anti-Corruption Court to attend trial on charges of victimising a whistleblower but was arraigned before the Chief Magistrate of the same court on fresh charges of conflict of interest.

Particulars of the new charges presented in court by the IGG prosecutor Mr Sydney Asubo state that Ms Ojangole participated “in the various processes and proceedings that culminated in her own appointment” as CEO of UDB, which amounts to conflict of interest.

In the earlier case, Ms Ojangole and two other officers of the bank, were accused of victimising Ms Charlotte Mucunguzi, a former employee of the same bank. It is said Ms Mucunguzi had raised a red flag on the improper handling of a $11.5m loan (about Shs28 billion) to Savannah Commodities Limited. However, on Wednesday, court released Ms Ojangole on a cash bail of Shs2 million on the third attempt after her lawyers had complained that the IGG was frustrating her bail application in “bad faith”.

Ms Ojangole had been denied bail on Monday because the IGG objected to her being represented by the same lawyers of UDB and that she would “interfere” with witnesses. When she reapplied for bail on Tuesday, IGG prosecutor Asubo asked for time to present evidence that Ms Ojangole would interfere with witnesses.

The trial Chief Magistrate Sarah Langa upheld the IGG’s plea and committed Ms Ojangole back to prison for another night. But on Wednesday, the IGG did not present the evidence. Instead Mr Asubo asked court to commit Ms Ojangole to the High Court for trial but keep her in jail. He again asked for more time to present proof that Ms Ojangole could interfere with witnesses, a claim her lawyers had refuted.

Ojangole’s lawyers argued that none of the intended prosecution witnesses still worked with UDB and therefore Ms Ojangole had no control over them. Granting bail to Ms Ojangole, the magistrate alluded to a deep-seated friction between the IGG and the bank management. “In case there are any unresolved personal issues, and I hope not, between the parties in this case, this court should not be used as the stage for such battles,” court ruled.

UDB complains

The complaints by the UDB board and management on the IGG approach to the investigators are not new. On February 15, 2013, UDB’s lawyers Ligomarc Advocates, complained to the IGG on the way the investigations into the complaints against the bank were being conducted.

Ligomarc said the inquiries lacked “clarity, were disruptive and disorderly” and bordered on “abuse of process” and raised concerns on confidentiality.

The lawyers complained, for instance, that investigating officers were “ferrying significant amounts of confidential information” from the bank, which ADB feared would be leaked to unauthorised recipients.

The bank’s request for investigating officers to inspect the documents on its premises and only make copies of specific documents they would require were “insensitively rejected,” the complaint added.

It further added that the IGG’s officers had ignored information that the complaints by the bank’s sacked staff over their dismissal was already before the Labour Office, “which is legally mandated to make determinations on rights in relation to employment matters”.

The lawyers argued that the IGG’s attempt to determine “whether the bank had acted in breach of the Employment Act when it terminated the former members of staff” was potentially illegal in view of an earlier High Court ruling that bars the IGG from making pronouncements on rights or interests of parties since this can only be determined by a trial before a court of law.

The board had sacked the former management team led by Mr Gabriel Etou over financial losses of at least Shs5 billion in the development finance component of the bank. An internal investigation, which was done by Ms Ojangole, the then chief internal auditor, unearthed suspicious transaction in the management of trade finance loans and implicated several officials including the then CEO, Mr Gabriel Etou and the director for development finance, Mr Stephen Opeitum.

The internal investigation was followed by another by the PriceWaterHouseCoopers, an international audit firm, which produced similar findings. Prof Sejjaaka’s board later asked the Auditor General to conduct a special investigation into the same issues.

The audit also produced similar results only that some of the officers who had earlier been implicated were exonerated. In September Prof Sejjaaka wrote to Ms Grace Akullo, the CIID about the same matter but no investigation into the matter has ever taken place.

Accusations

The bank’s board chairperson, Prof Samuel Sejjaaka, faults the IGG for prosecuting suspected culprits yet investigations are still going on. “Why is the IGG more interested in investigating complaints made against the bank by individuals accused of causing loss of billions of taxpayer’s money and not in investigating their suspected wrong doing?” Prof Sejjaaka asks.

Prof Sejjaaka claims some of the implicated staff who were sacked from the bank have relatives in the IGG’s office and says they are exploiting that personal connection to “pursue a vendetta against the bank’s board and management”.

The battles became particularly intense when Ms Ojangole, who authored the internal audit report that blew the lid off the scandal, was appointed CEO. Critics claimed that her original intention was to have others fired and eventually take the CEO’s job. They accuse her of lacking the experience required to run a development bank.

IGG Irene Mulyagonja says, however, that her office investigates any complaint they receive. “Did the management or board of UDB ever bring to our attention the existence of the Auditor General’s report (which implicated the sacked officers)?” Ms Mulyagonja asked. But Prof Sejjaaka insists the “unreasonableness” with which the IGG is handling the matter is “baffling”. He cites the incident at 3:30pm on Tuesday afternoon when Mulyagonja asked for certified copies of the minutes “of all UDBL shareholders’ meetings that took place prior to 20/06/2013 and any other subsequent meetings to date” plus certified copies of minutes of a general meeting by close of business that day”.

Prof Sejjaaka sees it as unreasonable that the bank official would “compile all the documents and deliver them to the IGG within about an hour”. However, Ms Mulyagonja insists it is an easy task to do. “If you are the company secretary and the records are there, how long would it take you to get them? How far away is UDB from the Inspectorate?” she countered. In all, it gets back to where it started – UDB believes that the IGG should concentrate on pursuing individuals accused of causing loss to the taxpayer.

Background to the investigations

The IGG, acting on information from a “whistleblowers”, started investigating the activities of the bank more than a year ago and has over the months queried several actions of the bank’s board and management. Such actions include the relocation of UDB offices to Rwenzori Towers, the hiring of staff and a proposed $11.5m loan to Savannah Commodities Ltd.

Eventually, the loan was not disbursed. The IGG received a complaint that UDB’s board had approved the loan sum to a single borrower which was much higher than the $3m ceiling within which the bank could lend. The IGG intervened to investigate the matter and blocked the disbursement of the loan.

Minister of Finance Maria Kiwanuka, under whose docket the bank falls and appoints the board, asked Bank of Uganda (BoU) to investigate whether the loan approval was done in a proper manner. A report from BoU, a copy of which Saturday Monitor has seen, cleared the process that was followed in approving the loan.However, the IGG, Ms Irene Mulyagonja, told Saturday Monitor that her office is still investigating the loan matter and other issues regarding the running of the bank. “When this whole investigation ends, there will be a report,” said Ms Mulyagonja who declined to be drawn into further details.